A third Canadian cannabis company has had its trading licence suspended following the recent fiasco with Ontario-based producer CannTrust.
Evergreen Medicinal Supply’s licence to grow and sell cannabis has been suspended by Health Canada, following an inspection of the British Columbia firm’s facilities in August, reports BNN Bloomberg.
It reports a Health Canada spokesperson as saying the suspension is a result of non-compliance, and designed to ‘protect public health and safety, including preventing cannabis from being diverted to the illegal market’.
Bonify Holdings, of Winnipeg, had its licence suspended by Health Canada in February, after it was found to be selling cannabis obtained from illicit sources, reports BNN Bloomberg.
This comes as the industry waits to hear what sanctions will be imposed on CannTrust Holdings, after the regulator found thousands of kilograms of cannabis being grown in unlicensed rooms.
Evergreen received its licence to sell medical cannabis in March 2017, and mainly produces cannabis for other licensed producers in a 5,700-square-foot facility. CannTrust’s licence to produce and sell recreational and medical cannabis in was suspended earlier this month.
Share Price Plummets
The company has been fire-fighting since July, and its share price has fallen from over C$13 dollars to less than C$2. This followed the disclosure it had breached Canadian regulations by growing product in unlicensed areas of its Pelham, Ontario facility.
The company used fake walls to ‘hide’ its cannabis from inspectors, according to newspaper reports. It later emerged that CannTrust’s Danish partner had supplied some of the ‘illegal cannabis to its patients, and those found guilty of such an act can face jail, reported BNN Bloomberg.
In August, CannTrust said Health Canada had found its Vaughan manufacturing facility non-compliant, too.
Fifty Per Cent Stock Haircut
The potential penalties for CannTrust include the loss of its licence or, less severely, a $1-million fine. This slew of bad news for the Canadian cannabis industry comes as investors are waiting to see the main cannabis companies live up to their five-star billing.
One of the sectors main players Aurora last week disappointed investors with lower than expected revenues. These compliance and performance issues are impacting investor confidence and share prices have fallen steeply: Aurora’s have halved to around C$7 in the last six months.
Earlier this week the Midas financial newsletter describes the situation in the Canadian cannabis industry in the following florid way: “CannTrust is the poster child for breaking the rules and heads a long list of licensed cannabis companies acting more like black market participants.
“The financial reporting of cannabis companies has constantly underwhelmed and the instances of outright malfeasance are accumulating. The fifty per cent haircut across the sector now appears deserved.”